Pulmonary toxicity caused by an antineoplastic drug, cyclophosphamide is becoming a more frequently recognized entity. Metabolism of cyclophosphamide in lung to alkylating metabolites and acrolein, a reactive aldehyde are in part responsible for pulmonary toxicity. Alterations in pulmonary mixed-function oxidase activity, glutathione content, and microsomal lipid peroxidation may be caused by the reactive metabolite acrolein. Potentiation of cyclophosphamide-induced pulmonary injury under hyperoxic conditions is caused by depression of pulmonary antioxidant defense mechanisms by cyclophosphamide and its other metabolites but not acrolein. Cyclophosphamide- and acrolein-induced alterations in the physical state of membrane lipid bilayer may be the major cause of inactivation of membrane-bound enzymes. These data suggest that cyclophosphamide and its reactive metabolites initiate peroxidative injury resulting in alterations in the physical state of membrane lipids which may be functionally linked to manifestations of cyclophosphamide-induced pulmonary toxicity.